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Inflexibility budget’s greatest shortfall

It was just bad luck that President Barack Obama unveiled his fiscal 2015 budget in the midst of the most dangerous geopolitical tensions Europe has faced since the end of the Cold War.

The Obama administration began working on the document long before the upheaval in Ukraine; Obama had no way of knowing its unveiling would compete for headlines with a Russian invasion of the Crimean Peninsula.

There is a lesson in this unexpected juxtaposition nevertheless: No nation can safely base its tax and spending plans on inflexible commitments.

Political life, both domestic and international, is too unpredictable. Yet U.S. government spending is mostly on autopilot.

The government is scheduled to lay out $3.8 trillion this fiscal year – 70 percent of which will go to mandatory-spending programs, chiefly Social Security, Medicare, Medicaid and interest on the federal debt. Obama’s plan for fiscal 2015 does not change this; it would increase overall spending slightly, paying for it with selected tax increases, while shifting money among priorities here and there.

But these tweaks would take place within the same 30 percent of discretionary spending that the current budget contains.

In saying this, we do not necessarily mean to question Obama’s specific priorities; in particular, it’s too simplistic to say that events in Ukraine, by themselves, justify a much higher level of defense spending than the Obama administration wants – though some will certainly suggest that.

Nor do we mean to demean important policy initiatives in Obama’s budget, particularly his call for an increase in the poverty-fighting earned-income tax credit for childless workers.

The latter proposal is among the few ideas in the budget that retains an outside chance of garnering Republican support in Congress, assuming the sincerity of the GOP’s recently expressed interest in more efficient methods of battling inequality and poverty.

The point is that a nation must be able to adapt its spending priorities, sometimes swiftly, in response to unforeseen contingencies. That’s harder to do when so many resources are pre-committed to a handful of worthy but expensive entitlements. In a budget of nearly $4 trillion, the president and Congress will argue over about $1 trillion, divided roughly evenly between defense needs and every other federal function. Under these circumstances, even the most modest policy prescription becomes a recipe for political trench warfare.

This structural problem requires credible structural reform – to both entitlements and taxes. In that respect, Obama’s budget is just the latest in a long line of plans, from Democrats and Republicans, that fails to deliver what the country most needs. Sooner or later, change must come, and preferably before a crisis forces it on us.

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